The government has approved a five-year reform plan aimed at stabilising and strengthening Bangladesh’s capital market by addressing prolonged stagnation, irregularities and excessive reliance on bank financing.
The plan, titled “Five-Year Strategic Framework for Reform and Development,” was prepared by the General Economics Division (GED) of the Planning Commission and recently approved by the Executive Committee of the National Economic Council (ECNEC).
The strategy focuses on the ‘3R’ approach Recovery, Restoration and Reconstruction with emphasis on protecting retail investors, improving governance and expanding long-term capital-raising opportunities.
Under the Recovery phase, authorities will seek to restore market discipline by strengthening surveillance against market manipulation and enhancing the capacity of regulatory agencies.
The Restoration phase will focus on expanding investment opportunities through new financial products, including bonds and sukuk.
In the final Reconstruction phase, the government aims to establish the capital market as one of the country’s key sources of long-term financing by 2031.
The policy document noted that Bangladesh’s financial system remains heavily dependent on banks, increasing pressure on the banking sector and creating asset-liability mismatches. Weak corporate governance, market manipulation, inadequate disclosure and limited participation by institutional investors have also undermined investor confidence.
The plan calls for strengthening the independence, technical capacity and enforcement powers of the Bangladesh Securities and Exchange Commission (BSEC). Modern surveillance systems will also be introduced to detect and prevent market manipulation more effectively.
Improving the quality of audits and corporate governance among listed companies is another key priority. The government also plans to reduce dependence on bank loans for long-term financing by introducing products such as green bonds, blue bonds, social bonds and Islamic sukuk to attract both domestic and foreign investment.
The strategy also seeks to increase the participation of institutional investors, including mutual funds, provident funds, insurance funds and pension funds, to help reduce market volatility. Measures to strengthen retail investor protection and awareness are also included.
Speaking on the initiative, DSE Brokers Association of Bangladesh President Saiful Alam welcomed the reform plan but stressed the need for effective measures to address the market’s longstanding problems.
He said one of the major challenges is that strong and profitable companies are reluctant to list on the stock market. He suggested introducing policy incentives or requirements to encourage such companies to raise part of their capital through the capital market.
Saiful Alam also called for stronger monitoring to prevent insider trading and corporate-level manipulation, noting that unusual share-price movements ahead of dividend announcements should be properly investigated.
He further proposed forming a special committee to monitor the activities of listed companies and curb the misuse of inside information and market manipulation.
The success of the five-year 3R reform plan, however, will ultimately depend on effective implementation, regulatory independence and visible enforcement against market irregularities.
